Moody’s Investor Service downgraded the six largest Canadian banks at the end of the day on Thursday and the Loonie got knocked for a loop in Asia.
USDCAD closed at 1.3655 on Wednesday and spiked to 1.3741 in Asia. European traders didn’t seem concerned with the Moody’s report and the sold USDCAD and drove it back to 1.3685 at the New York open.
The New Zealand dollar got beaten up as well. The Reserve Bank of New Zealand left interest rates unchanged and delivered a doveish statement. NZDUSD gapped lower, dropping from a pre-announcement level of 0.6937 to 0.6818 after the news.
AUDUSD dropped in concert with the Loonie and Kiwi in Asia but reversed those gains completely in Europe. AUDUSD open in New York a tick higher than where it was at the close.
EURUSD was quiet (as usual) in Asia but unable to crack below support in the 1.0820 area. The European Commission increased its EMU growth forecast to 1.7% from 1.6%. They also suggested that a rise in inflation to 1.6% in 2017 would be temporary and it would drop back to 1.3% in 2018.
Sterling traded sideways in Asia but dropped from 1.2947 to 1.2905 in Europe after a series of weak economic reports including Manufacturing Production, Industrial Production, and Trade. It bounced back to 1.2922 ahead of this morning’s Bank of England policy meeting.
Oil added to yesterday’s large gains, with WTI rising from $47.22 to $48.10 at the New York open. Oil is benefiting from the large crude drawdowns reported by the API on Tuesday and confirmed by the EIA yesterday. In addition, Saudi Arabia’s cut in supply to some Asia customers is helping the tone.
There is a bit of data from Canada and the US which may keep markets amused and entertained. The Bank of Canada’s quarterly review is released just after more housing data. The US data includes PPI, and Initial Jobless Claims.
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USDCAD Technical outlook:
The intraday USDCAD technicals are bearish. The downtrend from the May 5 peak of 1.3792 stays intact while prices are below 1.3740, and now looks for a break of the 1.3640-1.3660 area to extend losses to 1.3590. and then 1.3550. Longer term, the technicals are bullish. A break of 1.3750 will target 1.3850.
Today’s Range 1.3640-1.3740
Chart: USDCAD 1 hour
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